Examining the Nexus between External Debt and Economic Growth in Bangladesh: An ARDL-ECM Approach
2022
Ahmed, Imtiaz | Anjum, Mobasshir | Hasan, Md Mahmudul | Seikdear, Sahabuddin Ahmed
This paper aims to examine the nexus between external debt and economic growth in Bangladesh for periods ranging from 1973 to 2019. Time-series econometric techniques of Autoregressive Distributed Lag Model (ARDL) and Error Correction Method (ECM) are utilized in empirical analysis to investigate whether short-run and long-run dynamics exist between external debt and the growth of Bangladesh. Findings derived from the analysis reveal a long-run association between external debt and Bangladesh's economic growth. The error correction method also points out long-run adjustment if any disequilibrium arises in a period in the short run. The study recommends maintaining a stable position of overseas debt and ensuring compatible investment conditions for domestic and foreign investors. IUBAT Review—A Multidisciplinary Academic Journal, 5 (1): 26-34
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